News from the quarter

Q1: 1 January - 31 March 2022

Collaborative engagement: Tackling conflict mineral content in the semiconductor supply chain

“As a shareholder you should want us to care about conflict minerals … to address it”.

Brian Krzanich, CEO of Intel, 2014.

We were overwhelmed with the support this initiative received, totalling 160 investors with collective assets under management of US$6.59 trillion1. It is clear that the investor community recognises the challenges of mineral sourcing within the semiconductor supply chain, and believes more action is required in order to develop conflict mineral-free supply chains and improve industry practice.

A brief recap of the conflict mineral issue

There have been five broad trends impacting the sourcing of Tin, Tungsten, Tantalum, Gold and Cobalt (known as conflict minerals (CMs)):

  • The mining of these minerals has shifted from Australia and Canada to central Africa.
  • Smelting & refining (SORs) capacity has moved to Asia. SOR ownership is increasingly Chinese.
  • Frameworks on mineral traceability have stagnated. The OECD guidance is over five years old.
  • Regulation and public opinion are forcing greater scrutiny of complex supply chains.
  • High demand for semiconductors could encourage corner cutting in the sourcing of minerals.

Examination of a small sample of conflict mineral statements suggests that progress has been disappointing since an academic study of 1300 companies in 2015 found:

“The reports ultimately reveal shallow, almost cynical, compliance with poorly crafted rules built on a regulatory paradigm better suited to simpler contexts”. The Conflict Minerals Experiment. Jeff Schwartz. P133.

Despite valiant efforts, some conflict mineral statements show that progress is slow and that confidence in companies’ ability to track the provenance and integrity of minerals is low.

To this point, a central and candid sentence in the conflict mineral statement of one large American equipment manufacturer in 2021 has not meaningfully changed since the company started producing their SD form² for the SEC in 2014: 

For the significant majority of smelters reported by the Surveyed Suppliers, there is inadequate information available to assess the source of the conflict minerals they process. Therefore, for Covered Products manufactured in 2020… concluded in good faith that it lacks sufficient information to trace the chain of custody of any conflict minerals contained in its Covered Products up through the supply chain to a specific smelter or, in turn, to a country or mine of origin”.

The problem has not gone away and the associated human rights abuses are still evident. Only at the beginning of April we became aware of a crowd funding initiative to help finance legal proceedings against large technology brands by families from the Congo³. This points to intensifying reputational headwinds.

What have we done so far?

With the support from signatory investors, on 30 November 2021, we wrote to 29 companies. In the letter, we have encouraged the companies to: 

  • Develop and invest in technological solutions to improve traceability, possibly blockchain.
  • Increase transparency and reporting on minerals from mine to product.
  • Encourage and participate in industry wide collaboration to improve industry practices.
  • Impose and enforce harsher sanctions on non-compliance.
  • Reduce demand for new materials by improving recycling initiatives.

To date we have received a response from 21 of the companies. We have requested meetings with all the companies that have responded to the letter, and to date we have had meetings with eight companies.

What have we found?

  • The industry made an early decision to trace minerals in the downstream from smelters or refiners (SORs) and not in the upstream, from the mines. This means that the problem of mineral mixing before the minerals arrive at the SORs materially hinders the tracing of mineral provenance from mine to product.
  • The industry places a heavy reliance on the processes and assurances provided by the Responsible Mineral Initiative (RMI). Yet the RMI states clearly: “This assurance process does not result in a material certification nor does it determine that material at the company is “conflict-free” or is otherwise free of human rights abuses in the supply chain”.
  • Despite relying on suppliers for information, there is little industry collaboration. One foundry said fears of collusion, as with price fixing, was an issue and an explanation.
  • The RMI is considered to be the pinnacle of industry collaboration and yet some companies had little knowledge of the RMI. We note the RMI represents ten industries and is not dedicated to semiconductors.
  • Conflict minerals remain an issue still to be integrated into many senior executive committee agendas.
  • Few companies appear to be going beyond the requirements prescribed by OECD framework, as adopted by the RMI.
  • No company interviewed, so far, has committed budget for research on conceptual/unproven technological solutions, like blockchain.  A chicken and egg scenario was commented on here.

Have we achieved anything?

  • Many companies have asked for suggestions on how they could do more and we have been asked to share any good ideas/better practices we may identify during this engagement.
  • One company, which was previously unfamiliar with the RMI, now plans to pay for RMI services.
  • A foundry stated that this letter, with the weight of interest from investors, will raise the prominence and profile of the conflict minerals issue to the board level.
  • Another foundry suggested they would consider committing budget to research on conflict minerals tracing.


It is extremely early days for this multi-year engagement but it is clear that tracing mineral provenance is an extremely complex challenge for companies. Progress is slow. While there is a unanimous desire to improve practices, some companies are more eager and able to meet this challenge than others. Surprisingly, the strength of ambition to improve practices has been independent, so far, of company size or industry prominence. This may point to complacency within certain areas of the industry.

We will continue to update you on any progress we make and any challenges we encounter. 


[1] As at 30 November 2021

[2] An SD form is a specialised disclosure report used for investment disclosure reports outside the typical filing categories for the U.S. Securities and Exchange Commission (SEC) forms. SD reports include Conflict Minerals Disclosures and Responsible Sourcing reports.

[3] International Rights Advocates. Multinational companies are liable for human rights abuses within their supply chains

Reference material

European (ex UK) Sustainability strategy launch

On the 25 January 2022, we launched a new European Sustainability strategy portfolio which excludes UK-listed companies. The portfolio comprises 39 companies we consider to be among the very best sustainability companies in Europe (ex-UK), and complements the European Sustainability (inc-UK) strategy, which was launched in mid-2021.

Within the EU/EEA and Switzerland, the European (ex UK) strategy is only available to investors via a segregated mandate account.

Morningstar awards

We are delighted that Stewart Investors Sustainable Funds Group has won the inaugural Fund Manager of the Year – Sustainable Investing category at the 2022 Morningstar Australia Awards; as well as the Best Asset Manager - Sustainable Investing category and the Best Global Equity Fund for the Stewart Investors Worldwide Leaders Sustainability Funds (USD ACC) at the 2022 Hong Kong Morningstar Awards for Investing Excellence. 

First Sentier Investors announcement

On 1st March 2022, First Sentier Investors announced their decision to proceed with the closure and orderly wind-down of the St Andrews Partners investment team. This does not lead to any significant changes to the Sustainable Funds Group.

Q4: 1 October - 31 December 2021

Collaborative engagement: Tackling conflict mineral content in the semiconductor supply chain

During the quarter, we launched another collaborative engagement effort, supported by 160 investors with collective assets under management of US$6.59 trillion, focused on conflict minerals within the semiconductor supply chain.

Tantalum, tin, tungsten, gold and cobalt (referred to collectively as conflict minerals) are vital materials and building blocks of the semiconductor industry. The poor traceability of these minerals along complex supply chains, including smelting and refining, can obscure the provenance of these minerals. This can lead to the inadvertent financing of armed conflict and the abuse of human rights.

We are long-term investors who believe that sound labour practices and good environmental management go hand in glove with shareholder returns. As regulators and consumers pay increasing attention to the challenges of mineral sourcing within the semiconductor supply chain, we believe there is an opportunity for companies to take a lead in the development of conflict mineral-free supply chains. Specifically we wrote to 29 companies involved in the manufacture of semiconductors encouraging them to: 

  • develop and invest in technological solutions to improve traceability, possibly blockchain,
  • increase transparency and reporting on minerals from mine to product,
  • encourage and participate in industry wide collaboration to improve industry practices,
  • impose and enforce harsher sanctions on non-compliance,
  • reduce demand for new materials by improving recycling initiatives.

We are in the early stages of this engagement and intend to provide further updates on progress and company responses in due course.

UNCTAD Sustainable Fund Awards 2021

In October, at the World Investment Forum 2021, UNCTAD (United Nations Conference on Trade and Development) launched the Sustainable Fund Awards to recognise companies' commitment to Sustainable Development Goals (SDGs) funding and the achievements of high-quality, high-impact sustainable funds.

We are honoured that one of our Global Emerging Markets Sustainability funds was one of two winners awarded the UNCTAD Sustainable Emerging Market Fund Award 2021.

Further information on the awards is available online as well as the awards ceremony where Sujaya Desai, Co- Portfolio Manager, makes an acceptance speech on the team’s behalf. 

Global Emerging Markets Leaders Sustainability - UK and European launch

On the 2 December 2021, our Global Emerging Markets Leaders Sustainability strategy, which launched in the US in April 2020, became available to clients in the UK and is now available in Europe.

The fund invests in 25-60 high-quality emerging markets companies that we consider to be particularly well positioned to contribute to, and benefit from, sustainable development.

More information on the fund and strategy is available on our website.

Q3: 1 July - 30 September 2021

India Plastics Pact

In July 2018, we hosted an interactive forum in Mumbai with eleven Indian consumer goods companies to discuss the challenges around plastic waste and how they could best work together to improve the situation in India. A key output that stemmed from the forum was the need for a new industry body to work with government and agree on industry wide targets. The briefing and output papers from this forum are available online.

Since the forum, we are delighted to have supported and part-funded WRAP (a global sustainability charity), who have experience in rolling out Plastic Pacts globally, in the operational costs to develop and launch an India Plastics Pact. For more information on the India Plastics Pact, which launched on 3 September 2021, please visit the Pact’s website.

European SRI Transparency Code Compliance (Eurosif)

We are committed to transparency and believe that we are as transparent as possible given the regulatory and competitive environments that exist in the countries in which we operate. We meet the full recommendations of the European SRI Transparency Code. Our first statement of commitment, is now publically available on our website for European clients and covers the period to 31 December 2021.

A Responsible Investment Leader

We are proud to share that the Responsible Investment Association Australasia (RIAA) has recognised Stewart Investors as a Responsible Investment Leader 2021. This acknowledges our commitment to responsible investing; our explicit consideration of environmental, social and governance factors in investment decision making, our strong and collaborative stewardship; and our transparency in reporting activity, including the societal and environmental outcomes being achieved.

Read the full article

Diversity statement

Diversity is an integral part of sustainable development and is important to us as investors, employers and as members of society. We believe that understanding and making progress on diversity is an essential part of building an exceptional corporate culture and that greater diversity and inclusion of perspectives helps to generate better ideas and leads to better decision-making.

Read our Diversity Statement here

Q2: 1 April - 30 June 2021

European Sustainability strategy launch

On the 10th June, the team’s first dedicated European Sustainability strategy was launched for UK and European clients. More information on why we believe Europe offers exciting company investment opportunities that are leading the way in sustainablebusiness is available on our website.

Update to our position on harmful and controversial products and services

We have updated our position on harmful and controversial products and services to provide more clarity on the 0% revenue threshold we have for tobacco production and controversial weapons. In addition, we will disclose any material exposures above agreed thresholds on our website.

Febelfin Towards Sustainability initiative

During the quarter our Irish-domiciled fund within the Worldwide Sustainability strategy was awarded the Belgium Febelfin Towards Sustainability label. The label aims to instil trust and reassure clients and potential investors that the financial product is managed with sustainability in mind and is not exposed to unsustainable practices. More information on the label is available on the Towards Sustainability site.

FAIRR Initiative

We have signed up to the FAIRR Initiative, an investor network that raises awareness of the ESG risks and opportunities in the global food sector.

We have also supported and co-signed their global investor statement Where’s the beef?, which urges G20 governments to help build a more transparent, resilient and sustainable global food system, and disclose specific targets for reducing agricultural emissions within their Nationally Determined Contributions (NDCs) in the lead up to the UN Climate Change Conference (COP26) later this year.